Energy Dispatch 3

It has, to put it mildly, been a very busy time in the world of energy policy of late. This third edition of Energy Dispatch 3 not only provides an update on these changes, but showcases a whole raft of work undertaken by the AER in the last two months. Make sure you subscribe to ensure you’re up to date with everything that happens in the world of the AER.

A new era in energy

The Energy Security Board held its first—of what will be many—meeting in August. Comprised of the heads of the AER (Paula Conboy), AEMC (John Pierce) and AEMO (Audrey Zibelman), the ESB is chaired by Dr. Kerry Schott with Claire Savage as deputy.

The ESB is the result of the COAG Energy Council giving life to Recommendation 7.2 of the Finkel Review and provides whole of system oversight of energy security and reliability in order to drive better outcomes for consumers.

In October the ESB provided the Commonwealth Government with advice on establishing a National Energy Guarantee (NEG). The advice had been sought by Energy Minister Josh Frydenberg in response to AEMO’s report on the risks to reliability in the NEM.

The ESB specifically provided recommendations to support the provision of reliable, secure and affordable electricity in the NEM with a focus on ensuring:

the reliability of the system is maintained

the emissions reduction required to meet Australia’s international commitments are achieved

Canberra chatter

There have been a number of other significant developments—for the AER and the way we do our work since the last edition of Energy Dispatch.

The legislation to remove access to the Limited Merits Review (LMR) regime for AER determinations on network revenues was passed and then given Royal Assent on 30 October. This means that no AER determinations made since late June (when the government announced the change) can be challenged under LMR provisions.

In August, the Prime Minister met with the CEOs of eight energy retailers to identify ways to improve energy affordability for households and businesses. In these meetings, the retailers committed to working with the AER, and consumer representatives, on a range of measures including the provision of more simple and easily comparable information about energy offers. We have convened a reference group to assist our work in this area, which also will also be informed by behavioural insights gathered by the Behavioural Economics Team Australia Group (which sits in the Department of Prime Minister and Cabinet) and responses to an issues paper on measures including price fact sheets, price comparison rates, online tools and ways to assist customers who do not access the internet.

Five-minute dispatch

Here’s some other work that teams across the AER have been doing:

We released an Issues Paper seeking views on how to revise our decision on the operating costs for NSW and ACT electricity distributors following the Full Federal Court decision on the matter in May. Consumers and other stakeholders can make submissions on the process until 30 November 2017

Energex and TasNetworks paid penalties totalling $100,000 over incidents in which customers known to require life support equipment unexpectedly lost electricity supply. The companies also offered administrative undertakings that commit to improving their procedures and processes relating to life support customers. The issue gained significant media attention.

The draft determination on the amount of revenue that South Australian electricity transmission provider ElectraNet can collect through network charges was made in late October. If implemented, the draft decision reduces the amount ElectraNet can recover by $149.8 million, 8.6 per cent lower that ElectraNet proposed. Draft determinations were also made for TransGridand Murraylink.

Our staff have been visiting energy ombudsman schemes across the country to inform them about the upcoming ‘power of choice’ rule changes, which will see significant changes in metering. The greatest of these will be that distribution businesses are no longer responsible for installation of meters at premises, but this will become a contestable service, and customers will have greater choice and control over their energy use.

Plugged in

The AER has been out and about making a variety of speeches and presentations on our work and spreading the good word about energy regulation in general. Our Chair Paula Conboy took part in the Prime Minister and Energy Minister’s press conference to announce the NEG and she also spoke at the Australian Industry Group’s Energy Breakfast at the National Press Club.

AER Board member Jim Cox spoke at the All Energy 2017 conference as part of a panel looking at market disruption and the evolution of the energy landscape.

Watts in the pipeline

06 November – Submissions to the AER’s Review of Expected Inflation 2017 close. The method for estimating expected inflation has been a subject of debate in AER determinations. Expected inflation is an important parameter for modelling future revenues in both electricity and gas regulatory determinations and is applied uniformly across both sectors. On 13 October the AER published its preliminary position and a stakeholder workshop will be held on 31 October ahead of the close of submissions.

08 November – The Demand Management Feedback Forum will discuss how the AER intends to incorporate stakeholder submissions into our final scheme and allowance mechanism. The AER has already published draft versions of our new demand management incentive scheme and innovation allowance mechanism. The scheme and allowance mechanism will complement ongoing AER reforms targeting consumer choice and more efficient network pricing outcomes. This work includes tariff reform, metering contestability, ring-fencing and a rule change to strengthen the transparency and efficiency of replacement expenditure.

10 November – The AER is developing Compliance Procedures and Guidelines to set out the manner and form that businesses with obligations under the National Energy Retail Law and Rules must submit compliance information and data to us. The AER is consulting on proposed amendments to the Guidelines, with submissions due by 10 November 2017.

Jingle bells, jingle bells

The weather is warming up, the days getting longer and the cricket is about to begin, which can mean only one thing: Christmas is coming! The next edition of Energy Dispatch will be packed to the brim with festive cheer so remember to check your inbox in December.